Book Image

Bitcoin Essentials

By : Szmigielski
Book Image

Bitcoin Essentials

By: Szmigielski

Overview of this book

Blockchain is being billed as the technology of the future. Bitcoin is the first application of that technology. Mining is what makes it all possible. Exploring mining from a practical perspective will help you make informed decisions about your mining setup. Understanding what the future may hold for blockchains, and therefore for mining, will help you position yourself to take advantage of the impending changes. This practical guide starts with an introduction to Bitcoin wallets, as well as mining hardware and software. You will move on to learn about different mining techniques using the CPU, GPU, FPGA, and ultimately the ASIC as an example. After this, you will gain an insight into solo mining and pool mining, and see the differences between the two. The book will then walk you through large-scale mining and the challenges faced during such operations. Finally, you will take a look into the future to see a world where blockchain-based applications are commonplace and mining is ubiquitous.
Table of Contents (10 chapters)
9
Index

Majority attack on Bitcoin


The design of Bitcoin allows for one obvious attack. The attack is called a 51% attack, after the amount of hashing power that is required to mount such an attack. At various times, mining pools have come close or have achieved 51% of the hashing power. A dishonest pool operator could use that hashing power to mount an attack. Therefore, a responsible miner should monitor the pool and when a pool gets close to that threshold, the miner should switch to another pool. Keeping the hashing power distributed is in everyone's interest.

51% attack

Let's now discuss what a 51% attacker can and cannot do. We'll start with what they cannot:

  • An attacker cannot steal coins belonging to an existing address. This is because the attacker does not know the private key required to sign a transaction allowing transfer of the coins.

  • The attacker, also, cannot prevent transactions from being propagated throughout the network, since we are assuming that the attacker does not control the...